A new report offers more evidence that 20-somethings are worse off financially than their parents

Despite economic and stock market gains over the past nine years, many young adults are still struggling to get ahead in their financial lives and, in some ways, things may have actually gotten worse.

Americans age 25 to 34 with college degrees and student debt have a median net wealth of negative $1,900, according to a report analyzing 2016 Federal Reserve data released Thursday by Young Invincibles, a young adult advocacy group. That’s a drop of $9,000 from 2013, YI’s analysis found.

Though it’s likely that these young adults with college degrees will ultimately pay off their student loan burden, the report captures a moment in time when servicing student debt may pose an obstacle to this group’s other financial goals, like saving for retirement or a home.

“The economy is supposed to be doing really, really well,” said Tom Allison, the deputy policy and research director at YI and the author of the report. “But these short term gains are barely making a dent on young people’s long term plans.”

It’s hard to say exactly why the median net worth of young adults with college degrees dropped during this period, but Allison speculates that one reason may be that in 2016, student debt accounted for a larger share of overall debt for these young people than it did in 2013. And unlike other types of debt, such as a mortgage, student loans don’t come with an asset that could apply on the other side of the net wealth equation.

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A generation that entered adulthood during an economic downturn

The paper is just the latest evidence of the financial challenges faced by a generation of people who came into young adulthood during a major economic downturn.

Compounding the challenges of finding a first job amid stagnant wage growth — and, for some older millennials, a high unemployment rate — today’s young adults are the first cohort for which student debt is a necessity for most who pursue a college degree. About 70% of bachelor’s degree recipients graduate with student loans.

The financial experience of today’s young adults is fundamentally different from what their parents went through. Twenty and 30-somethings these days have lower incomes and are less likely to own homes than baby boomers were in the 1980s, YI found.

What’s more, they’ve accumulated just half the wealth of what their parents had amassed at the same age. In 1989, the median net wealth of all 25 to 34-year-olds, regardless of whether they had student loans was $25,786 in 2016 dollars, compared to $12,000 in 2016.

Today’s young adults face a “perfect storm,” Allison said. The rising cost of college means that students are increasingly relying on debt to finance their degrees. What’s more, college is more necessary than ever to succeed in today’s economy. And entering the workforce during a downturn doesn’t help.

Graduates must choose careers for money over love

Amber Williamson has felt these economic shifts first-hand. The roughly $60,000 the 24-year-old has in student debt has made it difficult for her to buy a car or rent an apartment without someone else to act as a guarantor. The debt is part of what makes her skittish about buying a home one day, Williamson said.

It’s also influenced the way she thinks about her career. Williamson said there are certain fields she knows she can’t enter because they don’t pay enough for her to cover her student debt and pay her other bills. After a stint teaching English abroad, she is looking for work while also applying to graduate school.

Williamson said she feels like it’s “wildly unfair” the way her generation has been pushed to pursue more higher education, often financed by debt, based on promises that they’d be able to find jobs to pay it back only to discover that’s not always the case.

“I’m doing everything right, but still being penalized for something I’ve been told to do,” she said.

While young people trying to get their financial footing, like Williamson, feel these economic trends acutely, they’ll likely pose a challenge to the economy overall, Allison said. For example, if student debt is making young adults skeptical of buying homes, retirees may not be able to unload that precious asset at a price that brings them some value, he said.

What’s more, the high cost of education means that parents and grandparents are increasingly taking on student loans to help their kids pay for school.

“It’s not just a young adult problem,” he said. “Their problems really are Americans’ problems.”